Ready to Take a Chance on One of the Hybrid Loans?

Most home buyers have several goals. You want to buy a home and get the biggest bang for your buck. That means you want to build as much equity as possible without giving the lender too many of those hard earned dollars. Lenders want to get their clients into an affordable home and still increase their bottom lines by as they can. There are a multitude of loan types available as it’s becoming harder than ever for people to realize their dreams of home ownership. Among them are hybrid loans.

We certainly want to help fulfill your dream of owning a home. If a hybrid loan is for you, we’ll work with you closely to make sure the terms are safe and affordable.

So what are hybrid loans? They are actually part fixed rate and part adjustable or ARM mortgages. You would sign up for a fixed rate for a period of time, lets say 5 years, and at the end of that time your mortgage becomes an ARM. You may well wonder why you should consider this if you can lock in at a low fixed rate. The answer is because signing a hybrid loan allows the fixed portion to be even lower than the current interest rate. Sometimes it can be as much as a full point. By taking the chance now you pay lower interest and a lower monthly house payment.

Hybrid loans usually have a fixed rate period of three, five, seven, or ten years. The shorter the period, the lower the interest. At the end of that time, the loan converts to an adjustable rate that changes each year for the duration of the loan; for example thirty years. The interest rate and payment will then adjust once each year.

In order to keep you from getting into serious trouble down the road, there are some caps put in place to protect you. They usually have an interest cap for the year, a cap for the monthly payment, and a lifetime cap for the total interest you pay. As with any loan, you must be fully aware of all of these conditions, and that’s where our expertise comes in.

When you get near to the end of the fixed period and decide you don’t want to deal with the fluctuations that will come when it converts to an ARM, you may choose to refinance the loan or sell the home.

As with any mortgage, you should do some comparison shopping, although we’re confident that our honesty and reputation will make us your first choice. We wouldn’t want you to be taken for a ride by an unscrupulous loan officer. There are so many things to study and compare these days that anyone can be easily confused. Hybrid loans are perfect for some and not so great for others.